BT: Types of Business organisation

Richard Clarke

BT (Business and Technology): Types of Business Organisation

Summary

There are three main business structures: sole traders, partnerships, and companies.

  • Sole Traders: Owned by one person, easy to start, full control, unlimited liability.
  • Partnerships: Shared ownership, pooled resources, governed by partnership deeds.
  • Companies: Separate legal identity, limited liability, owned by shareholders, run by directors.

Key Differences:

  • Liability: Unlimited vs. limited
  • Regulation: Low for sole traders, high for companies
  • Profit distribution: Sole traders keep all, companies pay dividends

Multiple-Choice Questions (MCQs):

  1. Which type of business offers limited liability?

    • A. Sole trader
    • B. Partnership
    • C. Company
    • D. Informal business
      Explanation: Companies are separate legal entities.
  2. A sole trader’s liability is:

    • A. Shared
    • B. Capped
    • C. Unlimited
    • D. None
      Explanation: Sole traders are personally liable.
  3. Partnerships are regulated by:

    • A. The Companies Act
    • B. Partnership agreement
    • C. Corporate Governance Code
    • D. Shareholder memo
      Explanation: A deed of partnership governs partnerships.
  4. Companies must publish:

    • A. Nothing
    • B. Internal memos
    • C. Financial statements
    • D. Only emails
      Explanation: Companies must file accounts.
  5. Profit in a company is distributed as:

    • A. Salary
    • B. All to directors
    • C. Dividends to shareholders
    • D. Bonuses only
      Explanation: Shareholders receive dividends.

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